Financial stocks, which led the post-election decline, regained some ground. Bank of America(BAC) shares rose 2%, making the stock the best performer on the Dow.

Apple(AAPL) shares fell deeper into bear market territory -- down more than 20% from their all-time-high of $705 hit in mid-September. The widely-held stock weighs heavily on the Nasdaq and S&P 500.

Following President Obama's re-election Tuesday night, attention has shifted to how lawmakers will address the looming fiscal cliff that threatens to throw the country back into a recession.

Investors remain focused on the debate in Washington over billions of dollars in taxes and spending cuts that are set to kick in automatically on Jan. 1, said Peter Cardillo, market strategist at Rockwell Global Capital. While he expects Obama and Congress to hammer out a solution before the deadline, "it's going to be touch and go for the market in the short run."

Stocks were up modestly in the morning, but selling quickly took over. There was no particular driver behind the afternoon retreat, said Dan Greenhaus, market strategist at broker-dealer BTIG. The fiscal cliff, he added, "is the only thing that matters."

Before the market opened, Wendy's(WEN) reported weaker-than-expected earnings for the third quarter. But the fast-food chain said same-store sales, a key measure of growth, increased for a sixth quarter in a row, sending shares up 2.5%. McDonald's (MCD)shares fell after the fast food chain said same-store sales declined 1.8% in October.

Dean Foods(DF) shares rose after the company posted a strong profit and said its CFO Shaun Mara is stepping down. Mara will be replaced by Chris Bellairs, who is currently CFO of the company's Fresh Dairy Direct division.

World Markets: While Europe's debt crisis drags on, investors can breathe a small sigh of relief after the Greek parliament approved a new round of spending cuts that are required for the country to receive the next installment of its international bailout.

Despite rising unemployment and declining business confidence in the euro area, the European Central Bank held its main interest rate steady at 0.75%.

The Bank of England left its interest rate unchanged and kept its asset purchase program at £375 billion.